FEDERAL COURT OF AUSTRALIA

Fresenius Medical Care Australia Pty Limited v Gambro Pty Limited

[2005] FCAFC 220

CORRIGENDUM

FRESENIUS MEDICAL CARE AUSTRALIA PTY LIMITED (ACN 067 557 877)

v GAMBRO PTY LIMITED (ACN 001 288 491) AND GAMBRO LUNDIA AB

NSD893 OF 2004

NSD1371 OF 2004

WILCOX, BRANSON AND BENNETT JJ

21 OCTOBER 2005 (CORRIGENDUM 5 DECEMBER 2005)

SYDNEY

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

CORRIGENDUM

1                     At the end of [102], add the following:

            It was not argued that the invention involved a new application of principle in the sense stated in Shave v HV McKay Massey Harris Pty Ltd (1935) 52 CLR 701 at 709 (approved in Lockwood Security Products Pty Limited v Doric Products Pty Limited (2004) 217 CLR 274 (at [59]).  The biBag is more than an ‘obvious mechanical substitute’ or a ‘disguise or cover’ for the invention the subject of claim 4 (Shave at 7-10).  Claim 4 has, by its wording, left the biBag out of the claim (Olin at 530).

2                     Delete [181] and insert the following:

THE SECOND AND THIRD DECISIONS

The second decision

181                  After the primary judge delivered reasons in the first decision, a dispute arose between the parties as to the appropriate orders to give effect to that decision.  This was because of a contention by Fresenius that the Fresenius machines can be employed without any infringement.  Gambro sought orders to the effect that Fresenius is obliged to modify its machines in such a manner as to prevent them ever being used with the biBag. 

182                  The primary judge heard argument about this matter.  On 31 May 2004, he delivered a supplementary judgment in which he recorded, at [10], that it was not put by counsel for Fresenius that the fitting on the Fresenius machine ‘is to be, or is able to be, employed for any purpose other than the acceptance of the affixation of a ‘biBag Article’ which, when used as a system in dialysis and cognate procedures, I have found to be an infringement’. 

183                  In his supplementary judgment, the primary judge recalled that Gambro had filed a further amended statement of claim during the course of the original hearing, which included a claim directed to s 117 of the Act.  The original statement of claim had also raised s 117.  That pleading had been the subject of the original defence, in which Fresenius admitted that it had sold, hired or otherwise disposed of dialysis machines, the biBag and modification kits to enable the machines to operate with the biBag.  A defence to the further amended statement of claim included similar admissions.

184                  In response to a notice to admit facts, Fresenius admitted that the Fresenius machines ‘are capable of only one reasonable use having regard to their nature and design, namely in conjunction with a source of water and a biBag Article to perform Treatment Procedures’.

185                  In argument before the primary judge, Fresenius contended that the admissions were limited to the supply of the machines together with the biBag  but did not extend to admissions that the supply of the machines with the fitting, but without the biBag, was an infringement.  Fresenius submitted to the primary judge that there was no debate at the trial on this issue because there was no relevant allegation as to whether the machines with the biBag option, but without the biBag, were capable of more than one reasonable use, having regard to their nature and design.  The primary judge at [31] rejected these submissions and held that the allegation of only one reasonable use had been pleaded and admitted.  Further, his Honour noted that, in the written opening and in closing submissions, Mr Catterns QC, counsel for Gambro had stated that there was no dispute under s 117 and invited Fresenius to respond.  Fresenius did not demur.

186                  At the stage of determining the appropriate orders, Fresenius raised the question of the scope and construction of s 117 and whether the relevant issues remained open.  The primary judge responded at [38]:

‘That issue has not been dealt with.  It has not been dealt with because it was not pleaded or otherwise raised to introduce it into the controversy otherwise, relevantly, framed by the originating process, the pleadings, the admissions, the openings, the evidence and the addresses.’

187                  Fresenius then indicated that it sought to withdraw admissions.  His Honour directed that the application proceed by notice of motion.  That gave rise to the third decision.

The third decision

188                  The third decision was the subject of further supplementary reasons for judgment delivered on 11 August 2004.  At paragraph 9 of those reasons, his Honour observed that the notice to admit facts was filed after taking account of the concerns of Fresenius, ‘a sophisticated commercial entity’.  The evidence also established that Fresenius’ solicitor correctly understood the effect of the admissions.  It was common ground that the machines can be used in two ways, with a biBag and with separate containers of liquid concentrate.

189                  The primary judge accepted that Fresenius’ legal representatives may have formed a view as to the proper scope of s 117 and the effect of the admissions.  However, that did not explain why nothing was said in response to Mr Catterns’ invitation in his opening (as in [185] above).  His Honour noted that Mr Catterns proceeded on the basis that all relevant matters had been admitted for the purposes of allegations under s 117.  Mr Catterns had submitted that any attempt to resile from those admissions would result in prejudice to Gambro and the need for a new factual controversy to be resolved, necessitating a re-opening of the case.  His Honour accepted that to be the case and declined to permit a re-opening of the litigation.  He was of the view that there would be prejudice to Gambro and that it would not be in the interests of justice, saying at [21]:

‘Parties in litigation are entitled to the benefit of the opportunity of informed and reasonably contemporaneous assessment of relevant evidence and issues so that, with the benefit of contemporaneity, choices can rationally be made in the conduct of such an expensive and difficult endeavour as litigation.’

190                  On 12 May 2004, the primary judge had:

(a)        declared that the appellant had infringed the Patent by selling, hiring and otherwise disposing of Fresenius Systems (‘Systems Declaration’); and

(b)        made orders restraining the appellant from selling, hiring or otherwise disposing of the “biBag” (‘biBag Orders’).

191                  On 30 August 2004, after dealing with the issues mentioned above, his Honour:

(a)        declared that the appellant had infringed the Patent by selling, hiring and otherwise disposing of the dialysis machines that in conjunction with a “biBag” make up the Fresenius Systems (‘dialysis machines’);

(b)        made orders requiring the appellant to modify the dialysis machines by removing four components that together enable the dialysis machines to operate in conjunction with the “biBag” as a Fresenius System; and

(c)        made orders restraining the appellant from selling, hiring or otherwise disposing of the dialysis machines, unless modified.

Fresenius’ submissions

192                  Fresenius’ submissions are to the effect that the Fresenius machines and systems do not infringe any of the claims of the patent in the absence of the biBag.  As the machines were in fact capable of substantial non-infringing use without the biBag, there was no justification for the orders made on 30 August 2004. 

193                  As a matter of law, it is submitted, lack of evidence cannot be remedied by resort to s 117 and s 117 can have no application.

194                  The primary judge rejected Fresenius’ contention that, properly construed, its admission was not that the machine without the biBag was capable of only one reasonable use.  However, in argument before us, Mr Archibald QC conceded that the evidence of more than one reasonable use of the machines was not drawn to the primary judge’s attention until the issue of appropriate orders was raised after delivery of the first decision.  Fresenius seeks to challenge his Honour’s conclusion as to the effect of its admissions and conduct of the litigation on its right to raise issues under s 117.

195                  Fresenius submits that, even if the primary judge’s construction of the admissions is accepted, they are framed in the present tense and cannot apply to the future state of affairs.  For the purposes of this submission, Fresenius accepts that it would be precluded from supplying the biBag. 

196                  Accepting for this purpose that the admissions were made and not withdrawn, Fresenius makes submissions on the effect of s 117, as a matter of law.  Fresenius argues that the admissions extended only to the facts and cannot affect the legal position.  Fresenius submits that s 117 ‘has no role’ in the context of combination product claims.

            Consideration

197                  As noted by the primary judge in the second decision, the Fresenius machines are capable of use with containers of liquid bicarbonate.  It was not suggested that such a system would infringe the claims of the patent.  The admission upon which Gambro relies is that the machines were capable of only one reasonable use: the use held to infringe the patent.  For the reasons that he gave, as to which no error has been established, his Honour declined Fresenius’ application to withdraw that admission.  The effect of the admission and the conduct of the case was that the case was fought on the basis that, if the Fresenius system were held to infringe, all of the elements of s 117 would be made out.  His Honour accepted that this led Gambro not to plead or to present evidence to support an alternative case of authorisation under s 13 of the Act.

198                  The basis of the primary judge’s decision was that there was no s 117 issue to be determined – all relevant admissions had been made.  That is, the effect of Fresenius’ admissions and conduct led Gambro to conclude, properly, that there was no suggestion that s 117 would not apply.  Whether the issue that Fresenius sought to raise after delivery of the first decision, and now seeks to reagitate, was factual or legal, Gambro’s contention was that, had it known that there was such an issue, it would have run a case on authorisation.  His Honour accepted that contention.  It follows that, even if the matters now sought to be raised are questions of law, the fact remains that, had Gambro been aware that Fresenius intended to raise an issue about the application of s 117, it would have run a different case.  The primary judge thought that was a conclusive consideration.  We see no error in his approach.

199                  There was evidence before the primary judge, on consideration of the appropriate orders, that Fresenius intended to supply users with containers for liquid bicarbonate or an alternative article.  This may explain one of the orders made by his Honour:

‘The Court grants [Fresenius] liberty to apply during the term of the patent to vary [restraining orders and orders to modify the machines] if it wishes to assert that any biBag System Component has a reasonable use as part of a system the exploitation of which would not infringe the patent.’

            The Fresenius machines were, relevantly, included within the definition of “biBag System Component”.  If there is non-infringing use, Fresenius can make an application for orders enabling it to supply the machine.

200                  The orders made by the primary judge allowed the supply of machines that had been modified so as permanently to remove the biBag connection.  Fresenius has not been restrained from supplying machines adapted for use with bicarbonate bottles.

201                  Fresenius submits that the evidence does not establish that it is reasonably certain that future infringing use will occur.  The orders may affect a new non-infringing use.  However, his Honour has provided a mechanism to cope with a future non-infringing use.  In the context of drafting orders of some complexity to uphold and give effect to the finding of infringement, taking account of existing use of the machines, the evidence as to future use and the possibility of a different future use, we see no error in the orders made by the primary judge. 

3                     Paragraphs 182 and 183 of the Reasons for Judgment should now be numbered 202 and 203 respectively.

Associate:

Dated:              5 December 2005

FEDERAL COURT OF AUSTRALIA

Fresenius Medical Care Australia Pty Limited v Gambro Pty Limited

[2005] FCAFC 220

CORRIGENDUM

FRESENIUS MEDICAL CARE AUSTRALIA PTY LIMITED (ACN 067 557 877)

v GAMBRO PTY LIMITED (ACN 001 288 491) AND GAMBRO LUNDIA AB

NSD893 OF 2004

NSD1371 OF 2004

WILCOX, BRANSON AND BENNETT JJ

21 OCTOBER 2005 (CORRIGENDUM 19 DECEMBER 2005)

SYDNEY

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

CORRIGENDUM

1                     [55], 12^th bullet point, the third sentence should read;

“Its use does not mean that infringement is avoided by the inclusion in a system of additional integers which are not part of the essence of the invention, even if present in other claims [132-133].”

2                     [62], line 4, replace “That is included in claim 4.” with; “That is included in claims 1, 2, 3 and 4.”

3                     [78], last paragraph of quoted text, replace “maintained is said third fluid conducting means” with; “maintained in said third fluid conducting means”.

4                      [82], second last sentence, should read;

“Looking at the claim “purposively” his Honour found at [159] that the ‘precise location of the break in the skin of the vessel through which the fluid passes into the intermediate ring and continues along the third fluid conducting means is functionally immaterial’.” 

5                     [132], last sentence, replace “the first fluid conducting means” with “the second fluid conducting means”.

6                     [171], second sentence, replace “concentrate” with; “concentration.”

7                     [175], first sentence, replace “obviousness idea” with; “obviousness of the idea”.

8                     [200], inserted by Corrigendum dated 5 December 2005, second sentence, replace “bicarbonate bottles” with “liquid bicarbonate bottles.”

Associate:

Dated:              19 December 2005